How Tether works (for brainlets)

Unfortunately, Veeky Forums is replete with poor, low-IQ people who desperately come up with bizarre conspiracies to compensate for their lack of understanding. Now let me shed some light on how Tether closely retains its price to the dollar without resorting to bullshit.

Tether retains its price because of arbitrage. Arbitragers are often whales because they operate on large volumes (10k+). They're verified with Tether, Bitfinex and whatever exchange they're using. Here are some scenarios:
- The arbitrager sells you bitcoin/ether for USDT at slightly above market value. USDT is redeemed for fiat by Tether, the fiat is used to buy bitcoin/ether on an exchange with the best rate - the same amount as was sold. The remaining fiat is the arbitrager's profit.
- The arbitrager buys from you bitcoin/ether for USDT at slightly below market value. Bitcoin/ether is sold for fiat on an exchange with the best rate, the fiat is converted to Tether. The difference between the new amount and the old amount is the arbitrager's profit.
Similar techniques work on Kraken's USDT/USD market and whenever USDT is traded for fiat:
- Sell USDT for fiat, use the fiat to buy USDT on Bitfinex, profit
- Buy USDT for fiat, redeem USDT, profit

Because of arbitrage, you don't have to actually cash out USDT yourself - they retain the price for you. This is called liquidity making. What about "dips", those happen because people are cashing out too fast and arbitragers don't have enough time to swap their lots.

Other urls found in this thread:

your entire post rests on USDT being worth 1 dollar...

Eoy expectation?

Regardless of your high IQ faggot. When burger gov notices tethers equal worth if a dollar, it'll say "oh hell no, not on God's watch".

And the other 19 posts of Tether FUD posts are resting on USDT being worth 1 dollar.


not being worth 1 dollar
being perceived by the masses that it's worth 1 dollar

all of crypto ALL OF IT, it's just commoditized trust. you say BTC isn't worth XYZ because tether is propping up it's value
WRONG! as long as someone is buying it for that price and someone else is selling it for that price then that's how much it's worth

>being perceived by the masses that it's worth 1 dollar
Is this not because everyone believes that they have "reserves"?

No, dummy. The USDT value is not based on faith, it's based on arbitrage. I literally created a thread about it.

>No, dummy
coming from a Tether pumper, this is priceless


when you buy BTC from Coinbase or Gdax or any other fiat exchange. you do so on the premise that they have fiat in their bank accounts to satisfy your withdrawal requirement. your concern of their solvency/liquidity is tantamount to your entry into this market because some day you'd like to redeem the fruits of your speculation in the hopes that the money you put in is less than the money you're going to take out. well USDT was never designed for redemption it was designed to create cross-exchange liquidity. brilliant idea. so they changed auditors TRIGGER THE BITFINEX'd tinfoil hat fudders.


That works well, until the US government comes to your shithole country and confiscates all your servers. The whole point of Tether is to bypass strict USD regulation and for money laundering. It doesn't matter if Tether is legit or not.

One of these days you'll visit the bitfinex/tether website and it'll be replaced by a FBI landing page. There wont be any warning, and you'll finally realize you were retarded this whole time


what is jurisdiction

So create Tether to pump the price of BTC in other exchanges, but people can only redeem Tether for the asset that Tether pumped...

US is king. When they want something from another country, they get it

Tether is held in place by:
>gullibility - people choose to believe USDT is backed by secure deposits.
>inability to short

If I could short USDT/long Fiat at 0.99, I'd have constructed a 100:1 odds bet that USDT is a scam.
Would sell my cat to set that trade up in size.

t. retired arbitrageur

so put it on Augur dipshit and post it
i'll take your odds

Wow OP, you are SUCH a good person! Yeah lets just tell everyone about how profitable tether arb is, now everyone can be rich!

Saged and hidden. Keep your shit to yourself faggot

The whole tether fud is pushed by people with malicious intentions on uneducated crypto investors, let’s face it 90% here don’t know jack shit about crypto beyond the basics, most don’t even know anything about their coins beyond a short summary of what they intend to do.

One of the strongest “arguments” tether fud has is the Printer which always leaves Newfags and Normies astonished.
Let me explain to all the new friends why tether prints 500million tether seemingly out of nowhere.
Whenever it looks like the market might dip whales and investors alike put part of their portafolio if not all their portafolio in tether, if bitcoin dips hard then u can buy at a cheaper price and buy shitcoins etc increasing your position during the dip.
Now USDT= 1 usd
Usdt going above 1 or below 1 by a big margin defeats its purpose that’s why tether is printed during times when people are buying a lot of tether or selling their crypto for tether u have a massive surge in demand and their reserves are depleted which is why they then print more to dilute the value of the tether in circulation (inflation), tether is a reflection of the value in the market, the more money pours into crypto the more tether will be printed.
Now you’re probably thinking what happens with that tether then, when people use their tether to buy back into bitcoin, ethereum etc it’s more often the exchanges who sell it to them, and that tether goes on to become part of their liquidity. Tether is not created out of thin air someone has to buy it with crypto assets that have “value”
If tether simple printed money of thin air the price or tether would crash and again it would defeat its purpose.

Now ofc tether is not perfect but a necessary tool, without tether banks would have killed crypto already. Banks refuse to provide liquidity to exchanges and often close or freeze their account without warning disrupting the service this would eventually strangle crypto.

Tether can’t pump btc price brainlet and only 11% of btc volume is in tether, fiat is still responsible for most of the volume .
Brainlet listen tether is used as cross-exchange liquidity because banks have been trying to strangle crypto by freezing and closing their accounts without warning leaving exchanges with no liquidity.
If they print tether to pump btc the price of tether goes down due a surge in supply while demand remains the same.
They print tether because people buy it in ever increasing amounts as the total marketcap grows.

no tether didn't pump the price of BTC
Korea did!
the highest traded volume was in KRW
and those bastards were paying a high premium for it too. much higher than anywhere else in the world

>They print tether because people buy it in ever increasing amounts as the total marketcap grows.
This. And it's so obvious these tether fuders are starting to sound more retarded every second. Plus, none of the big players(exchanges) would benefit from Tether crashing, and they are rolling in so much money that they can easily prevent it from doing so.

>USDT is redeemed for fiat by Tether
Stopped reading here, you are tripping nigger

>Describe a speculative bubble
>It just works
Fucking hell.

>Printed more tether than ever over the past month while market cap fell, doubling the supply of tether.
Lets assume I am wrong and a brainlet.
Please explain your logic to me.

if you're a tether fudder post a prediction market on Augur for the price or stfu



>i'll take your odds
That's like buying JPMorgan credit protection from Lehman Brothers

bullshit, you got cold feet
any crypto exchange that would let you go short is subject to the same systemic risk
fucking beldars ruining this board

>the delusion of corecucks
>fuck off roger bcashies donchutalkshitbout muh tethers

user, the trade you're proposing, +USDT/-Fiat is equivalent to:
>prance around in front of steamroller (USDT collapse)
>scatter nickels (forgo interest on -Fiat)
> ...

If you can't see why that makes you look retarded, you should probably get a new hobby.

i fled the market over tether rumours
still waiting to see what actually happened with that auditor before i buy back in

i think they've been very irresponsible and non-communicative with this issue and that's a bad sign

audit is going to come out clean
and you're going to miss out on major gains

it was literally you who proposed the trade
if you think USDT is going to fail and tank crypto, why even hang out here
if you think USDT is going to fail in isolation, then create a swap and I'll buy infinity worthless USDT 6 mths from now from you for .20c each
in short, stfu larping beldar

what audit? they just cancelled the audit

thanks, just bought 100k

user, your side of the trade is +USDT/-Fiat, my side would be -USDT/+Fiat.
You're going to need a day job, so work on your reading comprehension, algebra, probability, logic, ..., and personality.

>print tethers
>exchange for btc
>eventually you own enough btc to manipulate whole crypto market without putting much effort into it
>after a while sell whole project to banking jews who crash it without survivors

they got a new firm doing the audit

It sucks and all but hey I'm going to buy some BTC at 1k$ from some pink wojak.

thats the kind of news i've been looking for

Yeah, nah. They don't.


i dont know what that means

What was always shady about Tether to me is how they always print an exact amount, like it's always 500 million dollars, not 522,243,345 or whatever, it's always nice whole numbers.

Also if it's really Wallstreet money getting in as they claim why are they not buying BTC with real USD instead of buying this fake US dollar shit to trade on a shady hong kong exchange?